Your Down Payment

Many people who are looking to purchase a new house qualify for several different kinds of mortgages, but they can't afford a large down payment. Want to buy a new home, but don't know how you should get together a down payment?

Slash your budget and build up savings. Look for ways you can reduce your expenditures to put away money for a down payment. You may also decide to enroll in an automatic savings plan at your bank to have a percentage of your pay automatically transferred into savings. Some practical ways to put together funds include moving into less expensive housing, and skipping your family vacation for a year or two.

Sell things you do not need and find a second job. Perhaps you can find a second job and save your earnings. You can also seriously consider the possessions you really need and the things you can put up for sale. Multiple small things may add up to a fair amount at a garage or tag sale. Also, you might want to look into selling any investments you own.

Borrow from a retirement plan. Research the specifics for your individual plan. You may borrow money from a 401(k) for a down payment or withdraw from an IRA. You will want to ensure you are knowledgable about any penalties, the way this could affect on taxes, and repayment terms.

Ask for assistance from generous members of your family. First-time buyers are often fortunate enough to get down payment assistance from caring family members who are prepared to help get them in their first home. Your family members may be willing to help you reach the milestone of having your own home.

Research housing finance agencies. Special mortgage loans are provided to homebuyers in certain circumstances, like low income homebuyers or future homeowners planning to remodel houses in a particular area, among others. With the help of this type of agency, you can get a below market interest rate, down payment help and other perks. Housing finance agencies may assist you with a lower rate of interest, help with your down payment, and offer other assistance. The primary mission of non-profit housing finance agencies is boosting the purchase of homes in particular places.

Explore no-down and low-down mortgage loans.

  • Federal Housing Administration (FHA) loans

    The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in helping low to moderate-income families qualify for mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals who need to get home financing. FHA offers mortgage insurance to private lenders, enabling buyers who may not qualify for a conventional mortgage, to get a mortgage. Interest rates for an FHA loan typically feature the going interest rate, while the down payment for an FHA mortgage are less than those of conventional loans. Closing costs can be covered by the mortgage, while your down payment may be as low as 3 percent of the total.

  • VA mortgages

    Guaranteed by the Department of Veterans Affairs, a VA loan qualifies veterens and service people. This special loan requires no down payment, has mimimal closing costs, and offers a competitive rate of interest. Even though the VA does not issue the mortgages, it does certify eligibility to apply for a VA mortgage.

  • Piggy-back loans

    You can finance your down payment through a second mortgage that closes with the first. Most of the time, the first mortgage covers 80% of the purchase amount and the "piggyback" is for 10%. The borrower pays the remaining 10%, rather than putting the usual 20% down payment.

  • Carry-Back loans

    In a "carry back" situation, the seller commits to lend you some of his own equity to help you get your down payment funds. In this scenario, you would borrow the largest portion of the purchase price from a traditional mortgage lending institution and borrow the remainder from the seller. Usually you'll pay a slightly higher rate with the loan financed by the seller.

The satisfaction will be the same, no matter how you manage to pull together the down payment. Your new home will be your reward!

Need to talk about the best options for down payments? Call us: 407-834-3377.

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